GBP/USD Weekly Outlook

GBP/USD Weekly Outlook

GBP/USD's rebound lost momentum after hitting 1.5294 and turned sideway since then. With 1.5026 minor support intact, the corrective rise from 1.4830 could extend higher. But we'd expect strong resistance from 38.2% retracement of 1.6380 to 1.4830 at 1.5422 to limit upside and bring fall resumption eventually. Below 1.5026 will turn bias back to the downside for 1.4830 first. Break will confirm resumption of whole decline from 1.6380.

In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161 and could have completed as a triangle pattern at 1.6380. Focus is now on 1.4229 support and sustained break there should bring long term down trend resumption for a new low below 1.3503. However, strong rebound from 1.4229 will indicate that the whole pattern from 1.3503 is still in progress.

In the longer term picture, the complicated triangle pattern from 1.3503 argues that it's the fourth wave of the five wave sequence from 2.1161. That means, firstly, 1.3503 shouldn't be the end point of the downtrend yet and a new low is expected. However, secondly, as the next fall could be the fifth wave, the breach of 1.3503 could be shallow and brief from long term point of view and we'll then see a more sustainable rebound.